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Does more taxation lead to better government?

When you take a closer look, there is no logic in imposing a tax on sending and receiving mobile money because there is no economic activity or value addition taking place when one gives money to another.

In fact it could be that the sender and receiver is the same person!

People give and receive money all the time. They did so before the advent of mobile money. With mobile money transfers, there is an actual service and value addition, which constitutes an economic transaction. It is the fees for this service that should rightly be taxed.

The mobile telephone companies facilitate the movement of money from sender to receiver, and they charge transaction fees. That is business. It should be taxed, and the tax burden is inevitably passed on to the sender and receiver.

The government collects this tax. It can increase it if it wants to collect more. But imposing a direct tax on sending and receiving mobile money makes no sense at all. Taxing social media is a totally different matter, which has some rational economic sense and can be defended.

The NRM regime apologists have told us to be good citizens, pay the new taxes. In turn, we are told we should demand for accountability and better public goods and services. There is a long-held belief, both popular and scholarly, that taxation brings the government closer to the governed – that is, that governments become more accountable to the citizens when they collect more taxes.

This is the ‘governance dividend’ argument. The social contrast holds firm when governments depend on citizens for revenue. The idea that links taxation to government accountability came out of European state formation in the early modern period when state actors extracted revenue from merchants in turn for providing security. Depending on taxpayers to fund war efforts and other state expenditures also made governments more responsive.

But this responsiveness and accountability was truncated and restricted to a small group of the few taxpayers; in other words, governments were not accountable to the majority of the citizens. Full accountability to majority citizens came in the era of universal adult suffrage where everyone has one vote regardless of how much tax they pay or if they pay at all.

This democratic standard of one-man/woman-one-vote had nothing to do with taxation. It happened and continues to happen even in countries where majority of citizens don’t pay direct taxes and where the tax collection rate relative to overall national wealth is very small.

In contemporary times, the idea that taxation leads to better government and more accountability has been in international development circles. Critics of donor-aid made the argument that governments in poor countries account to external donors, and not the citizens because they depend on the former, and not latter for revenue.

The argument was then made that to achieve better government and improved accountability, African governments should tax more and more of their citizens. There is a general and plausible perception that the more citizens are taxed, the more likely they will pay attention to what their governments do with their tax money. This makes sense.

The bad news is that there is actually very little evidence to suggest that governments that tax more are also more accountable to the citizens. In fact Uganda is an excellent case. The NRM government is today more corrupt and less accountable when it collects 14 per cent of GDP than it was two decades ago when the tax-to-GDP ratio was less than 10 per cent.

Theoretically speaking, it does not necessarily follow that a citizen who pays tax (or pays more) is more demanding of government accountability than one who doesn’t, nor do governments who collect more tax revenue listen more to the needs and demands of the taxpayers.

Attaining more responsive and accountable government entails many processes and actions which turn on organisation and interest articulation. Citizens as individuals may have no influence on government behaviour even if they paid a lot of taxes unless they act collectively.

And acting collectively to influence government policy can happen regardless of who pays how much tax. In fact, non-taxpayers or low-taxpayers could easily come together, influence government policy, and extract benefits than those who pay more tax.

There is no straight line connecting more taxation to better government. In between lies so many intricate and complex dynamics. Taxpayers are not homogeneous. And they don’t have similar interests. They are not organised under the same umbrella so as to act collectively.

Governments on their part can tactfully play one set of taxpayers against another, or favour some groups more than others. In other words, governments can be selectively accountable. In Uganda today, the segment of taxpayers that is directly and heavily taxed, the workers and middle class, is the least likely to effectively exert pressure and extract policy concessions from the government.

Perhaps most crucial to note is that it does not make sense at all to expect accountability and better government, regardless of how much tax is collected, in an authoritarian system. Authoritarian rulers believe they are accountable to themselves and only occasionally play to the gallery of the masses through dubious electioneering.

moses.khisa@gmail.com

The author is an assistant professor of political science at North Carolina State University.

Comments

+2 #1 Stewart 2018-07-11 12:02
Let first agree that the government in this case means 'The First Family" or the "First Clan" for that matter, with that the topic would be, 'Does more taxation lead to better/ wealthy first family", and the answer is YES.
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+1 #2 Jama 2018-07-12 02:46
Fortunately you have answered the question i wanted to ask in your last paragraph.

Ugandans today are like pupils in the classroom of a wicked teacher, with a stick in his hand and hitting on the head of any pupil who tries to open his mouth.
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0 #3 Akot 2018-07-12 15:04
MOSES KHISA,

French want more tax relief, but public services MUST be maintained, improved: education, healthcare, unemployment allowances, roads/lights, housing...!

N.Sarkozy was not reelected because he started dismentling social services blaming the unemployed for receiving allowances for doing nothing!

E.Macron blamed the unemployed not long ago for receiving services/allowances for doing nothing: he was told off, even tax payers said he has no right to humiliate the unemployed, but must do his job as president by helping finance companies with creation of jobs!

But, the more there are jobs, the more there is tax money!

Uganda does not need more tax because there are practically no public services; money only goes for protection of Museveni, mps & to buy off those standing up to oppose the god...!
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0 #4 Akot 2018-07-12 15:14
Quoting Jama:


Ugandans today are like pupils in the classroom of a wicked teacher, with a stick in his hand and hitting on the head of any pupil who tries to open his mouth.


Thanks!

Is it not time Ugandans grow up & defend themselves?

Tribal leaders MUST stand down to being down the tribalistic system & ALL UNITE to block Musevnei to force him out: this will leave no choice to police/army but to take sides: with Museveni or with Ugandans!

To whom does Uganda formed by tribal lands belong, why is Museveni chef tribal leader in a country he has no tribal land, yet will rule through the tribalistic system till he drops dead?
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+1 #5 Akot 2018-07-12 15:36
Ugandans should see how even a developed country, UK is today being brought at the mercy of EU simply because of division & power hunger of politicians!

54 year old Boris Johnson is a big baby who sets fire but walks out the moment it's to be put off to ensure a fresh independent start - this big baby does not know it's UNITY that will allow British to sit down & have common ground face to EU that wants UK completely destroyed & at its mercy!

T. May was not FOR BREXIT, yet is doing her best to give chance to UK, but this seems to upset B.Johonson & other power hungry who don't see UK needs UNITY & NOW, if it's to survive sanctimonious imperialist power hungry domineering EU!

EU is like Musevnei, you can't defy them & get away with it, except through UNITY!...
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0 #6 Akot 2018-07-12 15:47
...EU does not know what democracy is & is not accepting UK walking out: B.Johnson & those at T. May's neck are helping EU destroy UK!

EU is upset it won't lay hands on Scotland oil!

Which other part of UK was suffocating with migration as England was, reason England needs Scotland oil too?

Well, Uganda tribal leaders, mps, fake opposition leaders, those bought off...are helping Museveni stay on & destroy/own the country & not 1 asks what will happen when Museveni will be in full control of every tribal land riches!

And Ugandans just watch, complain while wanting him out, yet maintain the tribalistic system keeping the demon in power!

Ugandans are waiting/asking Musevnei to solve their problems: why would he do so when he came to conquer, subdue, own the country?
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0 #7 mungu 2018-07-13 16:35
It is in the NRA/M DNA to dispossess not to tax. there are so many irrational taxes out there that have no place in any tax regimes around Africa or the world.

For example when you import a used car there is something called environment levy, then infrastructure levy, and more ridiculously there is an item called forms which I understand means the receipt on which the total tax is written.

the real reason why the elite don't complain is because for the majority of them including MPs they just recycle corruptly obtained money.

Take for example the NRM MPs that Hon. Semujju talks about, they pick millions of UGX currency from a Kololo house in the name of facilitating LC 1 flag bearers.

To whom are they accountable for such dubious money? Actually this regime collects very little real tax given the haemorrhage that goes on in the BOU.
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